Working time: salaried hours work; basic hours
The legislation that applies to this page is as follows:
* National Minimum Wage Regulations 2015, regulations 21 & 22
Definition of basic hours
“Basic hours” is an essential element of identifying the time to be treated as worked in each pay reference period for a worker performing salaried hours work.
A worker’s basic hours are the number of ascertainable hours in a calculation year (NMWM08040) in respect of which the worker is entitled under contract to their annual salary. The basic hours are identified when establishing that salaried hours work is being performed (NMWM07030).
It might be helpful to view the basic hours as forming the baseline figure that is used to calculate the average hours to be treated as worked for each pay reference period. This calculation enables annualised hours to be treated as being worked evenly throughout a year.
Using basic hours to calculate time worked in each pay reference period
The general approach for identifying the hours to be treated as worked in each pay reference period (NMWM09010) for a person performing salaried hours work is:
- For a weekly paid worker: the annual basic hours divided by 52;
- For a monthly paid worker: the annual basic hours divided by 12.
An example of calculating the hours that are treated as worked can be found at NMWM08035. The result of this approach means that as long as the worker works within their basic hours during the course of the calculation year, an employer only need pay for the hours treated as worked for each pay reference period.
It should be remembered that the calculation to determine the average hours to be treated as worked for each pay reference period forms no part of the consideration to establish the type of work being performed (NMWM07010). For example, just because an employer chooses to pay a worker based on capped hours per pay reference period does not necessarily mean that salaried hours work is being performed.
Adjusting the hours worked calculation
If the worker actually works more than their basic hours in the calculation year a further calculation (NMWM08100) is required to identify the additional time to be treated as worked for the remaining pay reference period[s] of that calculation year.
It can also be necessary to adjust the basic hours and the time treated as worked for a pay reference period, such as when a worker starts or leaves employment (NMWM08050 and NMWM08060), when a worker is absent (NMWM08070) or a contract is varied (NMWM08080).